2010 Partner'S Instructions For Schedule K-1 (Form 1065-B) - Department Of The Treasury
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122010
Department of the Treasury
Internal Revenue Service
Partner’s Instructions for
Schedule K-1 (Form
1065-B)
Partner’s Share of Income (Loss) From an Electing Large Partnership
(For Partner’s Use Only)
activities are separately reported for each
The written notice to the partnership
Section references are to the Internal
activity in box 9.
must include the names and addresses of
Revenue Code unless otherwise noted.
both parties to the exchange, the
General Instructions
Income, etc., from other activities
identifying numbers of the transferor and
(investment and portfolio income and
(if known) of the transferee, and the
deductions) are reported in boxes 2, 3,
Purpose of Schedule K-1
exchange date.
4b, and 6 for both limited and general
An exception to this rule is made for
The partnership uses Schedule K-1 to
partners.
sales or exchanges of publicly traded
report your share of the partnership’s
partnership interests for which a broker is
income, deductions, credits, etc. Keep it
Errors
required to file Form 1099-B, Proceeds
for your records. Do not file it with your
From Broker and Barter Exchange
You must report partnership items shown
tax return. The partnership has filed a
Transactions.
on your Schedule K-1 (and any attached
copy with the IRS.
schedules) the same way that the
If a partner is required to notify the
You are liable for tax on your share of
partnership treated the items on its return.
partnership of a section 751(a) exchange
the partnership income, whether or not
If you believe the partnership has made
but fails to do so, a $50 penalty may be
distributed. Include your share on your tax
an error on your Schedule K-1, notify the
imposed for each such failure required to
return if a return is required. Use these
partnership. Do not change any items on
be filed before 2011. For notifications
instructions to help you report the items
your copy of Schedule K-1. Generally, an
required to be filed after 2010, the penalty
shown on Schedule K-1 on your tax
adjustment to correct an error will take
is $100 for each such failure. However,
return.
effect for the tax year in which the
no penalty will be imposed if the partner
partnership actually makes the
The amount of loss and deduction that
can show that the failure was due to
adjustment. However, if the error involves
you can claim on your tax return may be
reasonable cause and not willful neglect.
a change to your distributive share of a
less than the amount reported on
Nominee Reporting
partnership item, the partnership should
Schedule K-1. It is the partner’s
file an amended partnership return and
responsibility to consider and apply any
Any person who holds, directly or
send you a corrected Schedule K-1.
applicable limitations. See Limitations on
indirectly, an interest in a partnership as a
Losses, Deductions, and Credits
nominee for another person must furnish
If the treatment on your original or
beginning on page 2 for more information.
a written statement to the partnership by
amended return is inconsistent with the
the last day of the month following the
partnership’s treatment, you may be
Electing Large
end of the partnership’s tax year. This
subject to the accuracy-related penalty.
Partnerships (ELPs)
statement must include the name,
This penalty is in addition to any tax that
address, and identifying number of the
results from making your amount or
This partnership has elected simplified
nominee and such other person,
treatment of the item consistent with that
reporting requirements intended to make
description of the partnership interest held
shown on the partnership’s return. Any
it simpler for you to report your share of
as nominee for that person, and other
deficiency that results from making the
partnership income, credits, deductions,
information required by Temporary
amounts consistent may be assessed
etc. Generally, income, capital gains,
Regulations section 1.6031(c)-1T. A
immediately.
credits, and deductions are combined at
nominee who fails to furnish this
the partnership level so that the number
statement must furnish to the person for
Sale or Exchange of
of partnership items separately reported
whom the nominee holds the partnership
to partners is reduced. Most limitations
Partnership Interest
interest a copy of Schedule K-1 and
and elections affecting partnership
related information within 30 days of
income are made by the electing large
Generally, a partner who sells or
receiving it from the partnership.
partnership.
exchanges a partnership interest in a
section 751(a) exchange must notify the
A nominee who fails to furnish when
For limited partners, income and other
partnership, in writing, within 30 days of
due all the information required by
items from the partnership’s trade or
the exchange (or, if earlier, by January 15
Temporary Regulations section
business and rental activities are treated
of the calendar year following the
1.6031(c)-1T, or who furnishes incorrect
as being from a trade or business that is a
calendar year in which the exchange
information, is subject to a $50 penalty for
single passive activity. These items are
occurred). A “section 751(a) exchange” is
each statement required to be filed before
reported in boxes 1, 4a, and 5, with most
any sale or exchange of a partnership
2011 for which a failure occurs. The
credits being reported in boxes 7 and 8.
interest in which any money or other
maximum penalty is $100,000 for all such
property received by the partner in
General partners must make their own
failures during a calendar year. If the
exchange for that partner’s interest is
determinations as to whether the activities
nominee intentionally disregards the
attributable to unrealized receivables (as
are passive for them. Therefore,
requirement to report correct information,
defined in section 751(c)) or inventory
partnership items from trade or business,
each $50 penalty increases to $100 or, if
items (as defined in section 751(d)).
rental real estate, and other rental
greater, 10% of the aggregate amount of
Cat. No. 26141W
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